Financial institutions will have an incredible number of data points to consider when developing investment strategies for their customers. Sameer Datye presents the most important insights.
The conflicts in Ukraine and Gaza, trade dispute continuation between the US and China that could take tangential escalations with the outcome of the Taiwan elections, the changing colors of Europe to the approval of Bitcoin ETFs all influence the post pandemic financial landscape. What other datapoints top on my list?
The pandemic aftereffects continue, nevertheless, the world is moving on towards economic recovery. Stimulus injection by governments and central banks worldwide are in response and recognition for the need of unprecedented measure. These times have two sides – incredible opportunities as well as serious risks.
Investors will need guidance to navigate the uncertain terrain and find ways to focus on diversification and risk mitigation strategies. Moreover, the rise of digital assets and sustainable investments emerges as a theme shifting investor priorities toward resilience and future growth.
2024 is the year of elections across the globe introducing a layer of complexity for wealth management. Economic policies, regulatory frameworks and geopolitical dynamics will impact investment landscapes. To navigate the post-election landscape, analytical capabilities combined with real-time information will prove to be extremely useful for adapting investment strategies. Financial institutions will dissect the election outcomes to recalibrate their portfolios and advise the customers.
Geopolitical tensions in Ukraine, Gaza, Red Sea, and South China Sea bring dark clouds to the financial markets in 2024. Navigating aggravated markets across the globe creates an institutional challenge. The shrewd approach might involve close monitoring of these developments and adjusting portfolio choices in an agile manner. Traditionally asset classes like gold and government bonds seem to gain popularity during such unstable times to help maintain a semblance of balance between risks and upsides.
Growth across the world has slowed down and continues to slow down. The public debt across the globe is at its peak prompting the IMF to project the debt burden growth at a highest rate for the following 5 years prior to the pandemic.
Interest rates do not show any real sustainable signs of easing off. China, though thoroughly opaque, has shown obvious signs of weakening economy. Overall, it is a bleak picture needing investor caution and ability to take quick and agile decisions to manage a diverse portfolio.
The persistent US & China trade conflict has a massive impact on overall global economy. This is further accentuated by the geopolitical tensions around Taiwan. Investment strategies must be adapted to the evolving relationship between these economic mammoths. There is a need to follow the subtle undertones and shades of geopolitical workings to support regional and sectorial diversification.
The persistent US & China trade conflict has a massive impact on overall global economy. This is further accentuated by the geopolitical tensions around Taiwan. Investment strategies must be adapted to the evolving relationship between these economic mammoths.
Policy changes and member state elections play a critical role in defining the economic track of Europe. This in turn complicates the political landscape affecting investors and institutions working in or exposed to European markets. Also, the dynamic political situation influences the regulatory framework affecting the financial services industry. Thus, there is a need to take the regulatory needs seriously and have a flexible and pre-emptive risk management strategy to hedge the risk of being on the wrong side of compliance needs.
Over the last couple of years, ESG considerations have gained sufficient traction supported by compliance requirement and societal pressure to become mainstream in investment strategies. Investors wanting to map their own values to their investment strategies continue putting a tremendous amount of pressure on financial institutions to create new investment strategies. Sustainable finance combined with sustainable ROI is a valid expectation. Inclusion and expansion of ESG investment strategies delivering financial returns will continue to challenge financial institutions.
The pandemic created a surge of new retail investors. Furthermore, this trend continues even in the post-pandemic times to exert considerable pressure on stock market movements. Financial institutions have ramped up their technical platforms to enable communication with retail clients, offer advice and personalized relationship management.
The emergence of hybrid advisory models combining human interaction and machine learning has allowed financial institutions to reach a larger audience more intimately. This in turn has enabled personalization of preferences and risk management strategies.
"The retail investor, once a spectator, is now a formidable player shaping the market's narrative." - Market Analyst, Investopedia
Trillions of dollars are in the middle of changing hands. For a couple of decades, the baby boomers will pass on their wealth to their heirs. The new owners are savvy towards non-traditional asset classes and will certainly experiment with those.
Conformist financial institutions will obviously find it difficult to retain or attract this segment and will need to find a way to be more progressive without giving up the sanity of robust risk hedging strategies. The year 2024 is just one of the years in the transition of multiple decades.
The pandemic continues to drive digital transformation persistently in wealth management and 2024 shows no signs of being any different. Innovations in business modelling, AI, data analytics supporting customer engagement and decision making continue to make huge strides. Institutions that leverage these technological and business opportunities gain and continue to benefit. Top-line impact with better customer reach and personalization and better bottom-line impact including efficient processes and optimized operations, will prove not only to be an advantage, but a valid survival strategy.
2024 will be remembered for the approval of Bitcoin ETFs. This has created a long-term impact on wealth management strategies. The journey of Bitcoin from a non-descript and inconsequential instrument to a legitimate investment option has been quite a story.
Opportunity and challenge are two sides of the same Bitcoin and the significance of the same will certainly not be underestimated by the financial institutions. This is the starting point of the crypto current saga requiring great foresight and adaptability to cope with this paradigm shift.
Ever-changing geopolitical winds, evolving market demands, societal changes, economic fluctuations, changes in compliance, and technology innovations combined with the pandemic reverberations create a volatile investment landscape. This year 2024 is certainly poised to be an interesting one to say the least.
Financial institutions will have an incredible number of data points to consider when developing investment strategies for their customers. With experts across the spectrum warning of troubled times with slowest growth post pandemic, a cautious approach is most likely a smart approach. Turmoil is certainly on the cards, but so is the plethora of opportunities.
Feel free to contact me to talk about the insights and how we could help! Tietoevry Banking’s new as well as revamped digital solutions for are already helping wealth managers in addressing their technology needs in portfolio management, digital channels, data insights, core solutions and more.
Sameer is responsible for insurance and wealth solutions. He actively promotes open ecosystem thinking that powers our WealthMapper and Insurance-in-a-Box platforms. At TietoEVRY, he has a long experience of working within the Healthcare, Insurance and Wealth domains. Prior to this, he worked as a product manager and a brand manager in the food, processing and packaging industry. He is passionate about translating technology innovations to business reality leading to better quality of human life.